Orient Green sells Maharashtra biomass plant to Singapore firm for ₹81 crore

M RAMESH Chennai | Updated on January 17, 2018

Orient Green’s 10 MW bio-mass power plant in Coimbatore district. The company plans to sell five-six of the 12 plants it owns, to pare debt

Orient Green Power Company (NSE: GREENPOWER) will get ₹81 crore from the sale of its 20 MW biomass plant near Kolhapur (Maharashtra), to Singapore-based Sindicatum Captive Power. The Kolhapur plant is one of the five-six (out 12 owned) that Orient Green intends to sell.

Sindicatum is a renewable energy company that has solar, biomass and waste-to-energy assets in Asia. It owns two bagasse-fired plants in Uttar Pradesh with a capacity of 60 MW and is building another similar 15 MW plant in Punjab.

Loss making entity

Orient Green, which owns 425 MW of wind and 106 MW of biomass power plants, has been making losses because of high interest charges. In 2015-16, the company’s consolidated turnover was ₹402 crore; interest charges amounted to ₹277 crore and the company made a pre-tax loss of ₹342 crore.

The company has about ₹2,000 crore of debt on its books and has been trying to bring it down; part of the plan is to sell off some plants.

‘Sale the only way out’

Orient Green is not able to run the plants to full capacity because of working capital constraints. If a few units could be sold, the cash could be used to run the others profitably, says S Venkatachalam, Managing Director of Orient Green.

Soon, the company will sell another plant of 10 MW capacity in Rajasthan, to an entrepreneur.

Alongside, Orient Green will also de-merge its wind and biomass businesses, and put the latter in a company christened Biobijilee Green Power Ltd. Shareholders will get one share for Biobijilee for every ten shares they hold in Orient Green.

Loan reschedule

Venkatachalam told Business Line that Orient Green is close to concluding a deal with its lenders to reschedule ₹1,000 crore of the ₹1,300 crore of loans connected to its wind business. Once the formal approval is received, the company will need to repay the loans only by 2033, instead of ten years earlier. The consequent saving in annual principal repayment will help cash flows, he said.

Cash flows are expected to improve further as evacuation of power by the Tamil Nadu electricity utility has improved this year. Non-evacuation of power cost the company around ₹250 crore in revenue, which was one of the primary causes of the company slipping into red, he said.

Three years back, 40 per cent of the power that could be produced was not generated because the utility would not buy. This number came down to 20 per cent last year, 12 per cent in the first quarter of the current year, and zero in the last couple of weeks, Venkatachalam said.

Published on August 28, 2016

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